“We will not take into consideration sovereign debt servicing costs if price stability mandates higher interest rates,” Weidmann, a member of the ECB’s Governing Council, told the Rheinische Post newspaper in remarks published on Thursday.
“In their own interest, governments should prepare for a rise in interest rates and not pretend that their debt burden can be serviced easily,” said Weidmann.
Reeling under the weight of a coronavirus-induced recession, European Union nations agreed earlier this year on an unprecedented 750 billion euro recovery package, funded by a joint debt issuance, a once-taboo subject long criticised by Germany. Member states have also taken on separate new debt to support their economies during the crisis.
The European Central Bank approved a fresh stimulus package this month, saying 2021 would remain difficult. It predicted that vaccinations could lead to sufficient levels of herd immunity by the end of the year.
Source: Economy - investing.com
